Gresham Technologies PLC Trading Update (7602T)
November 17 2023 - 1:00AM
UK Regulatory
TIDMGHT
RNS Number : 7602T
Gresham Technologies PLC
17 November 2023
RNS
17 November 2023
Gresham Technologies plc
Trading Update
Gresham Technologies plc (LSE: "GHT", "Gresham", "Group",
"Company"), the leading software and services company that
specialises in providing solutions for data integrity and control,
banking integration, payments and cash management, is pleased to
provide an update on trading and the discontinuation of its legacy
IT contracting services business.
FY23 performance and outlook
The Company expects FY23 Group revenues and earnings to be
in-line with market expectations. At the end of October, the
Company had 98% of expected revenues already recognised or under
contract and expected to be recognised prior to year-end. The
Company continues to have a solid pipeline of opportunities from
both new and existing customers and expects to close additional
Clareti subscription business before the end of the year which will
contribute to the Group's Annualised Recurring Revenue ("ARR") and
FY24 planned revenues.
Discontinuation of legacy IT contracting services business
The Company benefits from a long-standing relationship with
Australia and New Zealand Banking Group Limited (the "Bank"), the
Group's largest customer by revenue. The Bank was an early adopter
of Clareti and continues to expand the use of this software. In
recent years the Bank has also been a development partner of the
Company's Floe product and is also expected to expand the use of
this innovative banking solution.
As previously disclosed, the Bank's contractual arrangements
with Gresham also include lower margin legacy non-Clareti
agreements covering: the provision of IT contractors; the
re-selling of third-party software; and the provision of consulting
and managed services. These legacy businesses pre-date the Clareti
business, operate at a lower margin to Clareti, and as previously
stated are not considered strategic to the future development of
the Group or the creation of long-term value for our shareholders.
Over recent years the Company has taken strategic decisions to
substantially reduce exposure to these non-core offerings in order
to focus on the high-margin Clareti opportunity.
The Company has substantially completed negotiations with ANZ
regarding the renewal of existing business through 2024 and expects
ANZ to renew all Clareti Control, Floe and re-sold third party VBT
software licences for the period.
In consultation with ANZ, the Company has agreed to completely
exit the lower margin legacy sub-contracting business under which
locally based freelance IT contractors are provided to the Bank on
short-term agreements. The Company expects to recognise GBP8.5m in
revenue from these agreements in FY23 with fixed margins of 13% and
will discontinue the business from January 2024.
The majority of the sub-contracting business has been reported
as its own contracting services business segment, with a smaller
proportion being reported within Clareti non-recurring revenue
where a small number of contractors have been provided specifically
as part of the Floe project.
In line with the Group's strategy, these changes will accelerate
the Group's transformation to a pure-play SaaS company and lead to
an immediate improvement in gross and adjusted EBITDA margins.
FY24 Outlook
Except for the reduction to revenues directly attributable to
the discontinuation of the IT contracting line of business, the
Company is making no other material changes to its guidance for
FY24 revenues.
Since the move to a Clareti subscription model in 2019, and the
acquisition of Electra in 2021, the Company benefits from a strong
base of recurring revenues. Clareti recurring revenues now account
for 75% of FY24 planned Group revenues on a like for like basis
excluding the discontinued contracting services business. Whilst
the macro-environment is expected to remain challenging, the above
factors support management's confidence in the Clareti business and
prospects for on-going growth.
Ian Manocha, CEO commented:
"We are pleased to have supported ANZ for more than a decade to
meet their need for skilled IT resources and will now focus on
Clareti solutions where ANZ continues to be an important
partner.
Discontinuing our IT contracting business will further
accelerate our plan to become a pure-play subscription software
company and enable us to focus on creating long-term value through
our high-margin Clareti solutions. Whilst it has been a difficult
year for financial markets, and customer budgets are expected to
remain fairly tight, we have a solid pipeline of Clareti
opportunities and a strategic plan aligned to customer
priorities."
Enquiries
+44 (0) 207 653
Gresham Technologies plc 0200
Ian Manocha / Tom Mullan
Singer Capital Markets (Financial Adviser and +44 (0) 207 496
Broker) 3000
Shaun Dobson / Tom Salvesen / Jen Boorer
+44 (0) 203 405
Alma Strategic Communications 0205
Josh Royston / Hilary Buchanan / Matthew Young
Inside information
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
Note to editors
Gresham Technologies plc is a leading software and services
company that specialises in providing real-time solutions for data
integrity and control, banking integration, payments and cash
management. Listed on the main market of the London Stock Exchange
(GHT.L) and headquartered in the City of London, its customers
include some of the world's largest financial institutions and
corporates, all of whom are served locally from offices located in
the UK, Europe, North America and Asia Pacific.
Gresham's award-winning Clareti software platform is a highly
flexible and scalable platform, available on-site or in the cloud,
designed to address today's most challenging financial control,
risk management, data governance and regulatory compliance
problems. Learn more at www.greshamtech.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTFFFLVLSLRLIV
(END) Dow Jones Newswires
November 17, 2023 02:00 ET (07:00 GMT)
Gresham Technologies (LSE:GHT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gresham Technologies (LSE:GHT)
Historical Stock Chart
From Apr 2023 to Apr 2024
